The themes will drive the coming reckoning. From Charles Hugh Smith at oftwominds:
Everyone at the trough believes that the transition from liquid water (free flowing credit) to ice cannot possibly happen. So when it happens, everyone will be surprised.
Morgan Stanley recently came out with their 3 Themes that will impact markets for many years: longevity, AI tech diffusion, and decarbonization, i.e. the transition from hydrocarbon fuels to so-called “green energy.”
That’s the status quo: everything’s great! Pills that cost $1,000 a month will make us live longer, AI will increase corporate profits (which is the entire point of the economy, of course) and those who invest in the “green energy” transition will be rewarded with fabulous wealth.
That all sounds peachy, but the real world will be defined by four much different themes: sclerosis, dysfunction, debt saturation and power asymmetry.
Sclerosis: the same old nodes of power cling onto power and so nothing changes because nothing can change: those in power must maintain or expand their power, regardless of what comes along, and that sclerosis is the systemic problem that cannot be resolved.
2. Dysfunction: nothing works due to the consequences of sclerosis: those who cling to power do so by eliminating every dynamic of open, self-correcting systems: they get rid of competition (every sector is dominated by monopolies, cartels or state-cartels), they get rid of transparency (information asymmetry is how they maintain power) and they have a lock on regulatory complexity / capture: first jump through all these hoops and maybe we’ll let you propose some worthless policy tweak that leaves our power intact. Or we’ll co-opt you by inviting you to become one of our flunkies, PR flacks, factotums, enforcers, lackeys, etc.
In a system rigged to maximize the profit and power of the few at the expense of the many, nothing works because the system is no longer capable of self-correction.
